Correlation Between ES Ceramics and Ho Hup
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and Ho Hup at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ES Ceramics and Ho Hup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and Ho Hup Construction, you can compare the effects of market volatilities on ES Ceramics and Ho Hup and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ES Ceramics with a short position of Ho Hup. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Ho Hup.
Diversification Opportunities for ES Ceramics and Ho Hup
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0100 and 5169 is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Ho Hup Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ho Hup Construction and ES Ceramics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ES Ceramics Technology are associated (or correlated) with Ho Hup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ho Hup Construction has no effect on the direction of ES Ceramics i.e., ES Ceramics and Ho Hup go up and down completely randomly.
Pair Corralation between ES Ceramics and Ho Hup
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the Ho Hup. But the stock apears to be less risky and, when comparing its historical volatility, ES Ceramics Technology is 1.14 times less risky than Ho Hup. The stock trades about -0.01 of its potential returns per unit of risk. The Ho Hup Construction is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Ho Hup Construction on August 31, 2024 and sell it today you would lose (13.00) from holding Ho Hup Construction or give up 40.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. Ho Hup Construction
Performance |
| Timeline |
| ES Ceramics Technology |
| Ho Hup Construction |
ES Ceramics and Ho Hup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and Ho Hup
The main advantage of trading using opposite ES Ceramics and Ho Hup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, Ho Hup can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ho Hup will offset losses from the drop in Ho Hup's long position.| ES Ceramics vs. Binasat Communications Bhd | ES Ceramics vs. Nova Wellness Group | ES Ceramics vs. KPJ Healthcare Bhd | ES Ceramics vs. Resintech Bhd |
| Ho Hup vs. Binasat Communications Bhd | Ho Hup vs. Southern Steel Bhd | Ho Hup vs. Malayan Banking Bhd | Ho Hup vs. Mycron Steel Bhd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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